France received a rap on the knuckles yesterday from the EU's top court over the funding of free carcass collections from farms and slaughterhouses. The European Court of Justice described the measure as an illegal subsidy for French meat exports.

France put in place a policy of taxation on meat purchases in order to fund a compulsory government scheme to collect slaughter waste unfit for human or animal consumption. However supermarket GEMO challenged this tax in the French courts as part of an illegal scheme of state subsidies. A French court then referred the law at issue to the European Court of Justice.

"Such state intervention is liable to affect trade between Member States by distorting competition, as it constitutes an advantage for the undertakings in question by relieving them of a financial burden which should properly be paid out of their budget," the Court of Justice said in a statement.

The court said that atate-subsidised production costs unfairly allowed French farmers and slaughterers to undercut competitors in the other 14 EU member states, a ruling that will undoubtedly provoke consternation in France.

Nonetheless, EU competition law is quite explicit in banning ongoing state subsidies that give single industries in one state an advantage over another.